I've spent almost my entire career as a journalist covering tech in and around Silicon Valley, meeting entrepreneurs, executives and engineers, watching companies rise and fall (or in the case of Apple, rise, fall and rise again) and attending confabs and conferences. Before joining Forbes in February 2012, I had a very brief stint in corporate communications at HP (on purpose) and worked for more than six years on the tech team at Bloomberg News, where I dived into the financial side of tech. Before that, I was Silicon Valley bureau chief for Interactive Week, a contributor to Wired and Upside, and a reporter and news editor for MacWeek. The first computer game I ever played was Zork, my collection of now-vintage tech T-shirts includes a tie-dye BMUG classic and a HyperCard shirt featuring a dog and fire hydrant. When I can work at home, I settle into the black Herman Miller Aeron chair that I picked up when NeXT closed its doors. You can email me at cguglielmo@forbes.com.

Ban On Some Older iPhones, iPads Could Cost Apple $680 Million

Updates with analyst comment on possible $680 million revenue hit to AppleApple in seventh paragraph.

In what patent watchers are calling a surprise move, the U.S. International Trade Commission, or ITCITC, has sided with Samsung in a patent dispute with Apple and placed a U.S. import ban on some older models of the iPhone and iPad.

The ITC’s four-page “final determination,” issued today, covers versions of the iPhone 3GS, iPhone 4, iPad 3G and iPad 2 3G distributed with cellular service by AT&TAT&T. It doesn’t effect WiFi versions of the iPad. According to Foss Patents, which has closely been following the case, the import ban will go into effect unless its “vetoed by the White House during the 60-day Presidential Review period” or if Apple gets the ruling overturned on appeal. Apple said today that it will appeal the ruling and that it doesn’t have any effect on product availability in the U.S.

This decision isn’t part of the broader patent war going on between Apple and Samsung over design and utility patents that was the source of a court battle in California last year. It has to do, Florian Mueller of Foss Patents notes, with a cellular standard-essential patent (SEP) asserted by Samsung. He’s outlined the entire history of the ITC dispute between the two companies, which started in June 2011, and sums it up this way:

U.S. Patent No. 7,706,348 concerns an “apparatus and method for encoding/decoding transport format combination indicator in CDMA mobile communication system” (an allegedly UMTS-essential patent). Newer iPhones and iPads coming with QualcommQualcomm baseband chips (starting with the iPhone 4S) are definitely not affected, limiting the potential impact of this decision on Apple’s revenues — basically, Apple would have to make the iPhone 4S its entry-level iPhone model and discontinue U.S. sales of older iPhones (and the “new iPad 4G”, the third-generation iPad, its entry-level model for iPads with cellular connectivity; WiFi iPads are not affected at all). Formally the decision also relates only to the AT&T versions of those older products, but Samsung reserved the right to allege infringement by Apple products running on other networks (unless they come with Qualcomm baseband chips).”

“We believe the ITC’s Final Determination has confirmed Apple’s history of free-riding on Samsung’s technological innovations,” Samsung said in a statement to Cnet. “Our decades of research and development in mobile technologies will continue, and we will continue to offer innovative products to consumers in the United States.”

“We are disappointed that the Commission has overturned an earlier ruling and we plan to appeal,” Apple spokesoman Kristen Huguet said in a statement. “Today’s decision has no impact on the availability of Appleproducts in the United States. Samsung is using a strategy which has been rejected by courts and regulators around the world,” They’ve admitted that it’s against the interests of consumers in Europe and elsewhere, yet here in the United States Samsung continues to try to block the sale of Apple products by using patents they agreed to license to anyone for a reasonable fee.”

Gene Munster, an analyst with Piper Jaffray, said the ruling, if held up, could cost Apple about $680 million, or 1 percent, in lost revenue from the iPhone 4 in the next few months. The iPhone 4 is the only one of the ITC-named devices with ”measurable sales,” accounting for about 8 percent of Apple’s $43.6 billion in revenue in the March 2013 quarter. “We estimate sales of the iPhone 4 on AT&T will account for even less: about 1% of revenue [$680 million] in the June and September quarters. The ruling could be reversed if Apple’s appeal is held up. We expect the iPhone 4 will be discounted by the end of September 2013 when the iPhone 5S comes out.” AT&T customers unable to buy the iPhone 4 may opt instead to buy an iPhone 4S or iPhone 5, Munster says.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Apple started this war with Samsung and Google. Apple goes around buying patents. Google had not pantented universal search and Apple bought the patent and made Google pay for it. Now they are getting a taste of their own medicine. Don’t be such a fan boy and look at the big picture. What goes around, comes around.

You can bet the Obama administration is behind this just as they’ve instigated the witch hunt on e-books on behalf of Amazon and Sen. Carl Levin went after Apple for not paying enough taxes. Seems GE, Exxon Mobile and Chevron paid NO taxes yet were they also called to explain? Methinks Apple didn’t give Obama a kickback for his re-election is why the recent attacks.

You may want to take a look at page 28 of Exxon Mobil 2012 financials (public records). They paid over 31 Billion in income taxes last year. That does not include sales based or other taxes and duties which accounted for almost 70 billion. It literally took me 3 minutes to search for and find the FACTS instead of assuming what someone’s talking points have told me is true.

Let us be real here. It only effects older equipment of Apple. Those whom like Apple will simply buy the newer equipment. Apple will not loose anything. The only loser in this is the consumer who will have to pay a bit more. Or Apple can simply reduce their pricing based on the larger volume on fewer devices.

This “ban,” is entirely irrelevant and will have no impact on sales as the iphone 3GS was discontinued in 9/2012, the ipad 3G discontinued 3/2011, the ipad S3G discontinued 3/2012 and as for the iphone 4 the only product mentioned in this ban by the time it reaches the Federal circut for appeal, as Apple of course is appealing, which will take any where from up too two years as anyone knows has t tried to get a court date for any civil matters the iphone 4 will be largely irrelevant, as it will have been replaced and already has been by upgrades to the iphone. This is just background noise, and negative PR by Samsung. I am looking forward to iradio streaming, the WWDC conference, seeing the new design for iOS 7 led by Jony Ive, the new lower priced iphone released likely later in the summer and all the interesting other products and services Apple has been working on.

Apple goes around buying patents. Google had not patented universal search and Apple bought the patent and made Google pay for it. Now they are getting a taste of their own medicine. What goes around, comes around.